Vietnam emerges as key beneficiary of trade war

Vietnamese companies are emerging as key winners of the trade war between
the U.S. and China, according to a new survey of companies from the two
nations.

Both American and Chinese companies participating in the survey, published
on Monday by the Guangzhou-based American Chamber of Commerce in South China,
said that as a result of the trade conflict, they have been losing market
share, especially to companies from Vietnam.

Chinese companies reported also losing sales equally to companies from
India, the U.S. and South Korea. For American companies by contrast, Germany
and Japan were the next keenest rivals.

Since July, U.S. President Donald Trump has imposed punitive tariffs on $250
billion worth of annual Chinese imports to push demands for Beijing to change
key elements of its industrial policy. Chinese leaders have responded with new
tariffs on $60 billion worth of U.S. exports.

A majority of both U.S. and Chinese respondents to the AmCham survey
reported already feeling a negative impact from the tariffs, though the share
of American companies agreeing with this was significantly higher than among
their Chinese counterparts. The respondents identified a reduction in profits
as the top effect of the trade conflict, though only 20% of the 219
participating companies said the sales impact was more than $10 million.

Nevertheless, with the potential for more tariffs looming, most survey
participants, which was conducted Sept. 21 to Oct. 10, said that they are
looking at shifting production, assembly or sourcing of supplies to third
countries, with Southeast Asia as the leading choice.

Some companies are already putting such plans into motion. Panasonic, for
example, is moving production of car electronics from China to Thailand,
Malaysia and Mexico. China's GoerTek, which assembles wireless earphones for
Apple, has notified suppliers that it intends to relocate some of its
production to Vietnam. Chinese polyester producer Zhejiang Hailide New Material
is investing $155 million in a factory in Vietnam with an eye toward U.S.
exports.

Close to half of the companies in the AmCham survey reported feeling a trade
impact beyond tariffs from the U.S.-China confrontation. For example, 44% said
that customs clearance for their shipments had slowed while 38% said that
inspections had increased and that approval for licenses was taking longer.

The survey largely echoed the findings of a similar one conducted a few
weeks earlier involving about 430 members of the American chambers of commerce
in Beijing and Shanghai. The biggest difference was that nearly two-thirds of
respondents to the earlier survey said they had no plans to shift manufacturing
out of China despite the new tariffs.

Trump and Chinese President Xi Jinping are expected to meet next month on
the sidelines of the Group of 20 summit in Argentina, but few expect a
breakthrough soon on the trade conflict.

In the AmCham South China survey, more than half of the participants said
they expected the impact of the trade war to last for at least another year. Of
the U.S. participants, 54% said that Trump's tariffs will not have any benefit
for their company or result in an improved business environment. Among Chinese
companies, the most common view of the tariffs is that they will "speed up
China's economic transformation and upgrading."

The Asian Development Bank recently trimmed its 2019 growth forecast for
emerging Asia to 5.8% from 5.9% due to the trade conflicts while noting that
the impact does not hurt all countries evenly "as trade is redirected within
global supply chains to economies producing similar goods, benefiting in
particular Southeast Asia."